Purchasing – Guide to VAT Reliefs

Introduction

The University, due to its status as an exempt charity and eligible body for VAT purposes, is able to take advantage of special VAT reliefs available on certain purchases which mean we either don't have to pay VAT or can pay a reduced rate of VAT.  For each of these reliefs specific conditions have to be met.

If we want to take advantage of these reliefs we normally need to supply evidence to our suppliers that we are a qualifying charity or eligible body and provide a written declaration or ‘certificate’ confirming that the conditions have been met.

Most of these VAT reliefs on purchases are available only to the University and not its subsidiary companies.

There are also general reliefs available that zero rate or exempt from VAT supplies of certain goods and services.

Main areas impacting on the University are summarised in this guidance.  More detailed guidance and assistance in each area is available from the University Tax Manager, phone extension 17140, e-mail finance-vat@bristol.ac.uk

Relevant Certificates are available in the certificates section of the website.  These will need to be completed and sent to suppliers at point of order.

Charity-funded medical, veterinary, and scientific equipment for medical and veterinary research etc.

Certain goods and services can be zero-rated when purchased by the University with charitable or donated funds.  They may be also be zero-rated when purchased by any individual, group or organisation for donation to the University.

In this respect qualifying goods include medical, veterinary and scientific equipment for use in medical or veterinary research, training, diagnosis or treatment.  Computer software may also be zero rated when purchased solely for these purposes.

The repair, maintenance and installation of these qualifying goods will also be zero-rated.

Detailed guidance is available from the University Tax Manager in respect of what types of equipment and activities are within this exemption.

Certificates to use to claim exemption are as follows:

Certificates are not required to be sent to suppliers for purchases from other EC member states – in this case for qualifying items a form needs to be completed and e-mailed to the finance office to avoid EC acquisition VAT being levied. This form is as follows:

Proactis code to use - ZRN

Medicinal products

When the University is engaged in the treatment or care of people or animals, or in medical or veterinary research, it can purchase medicinal products at the zero rate of VAT.

A medical product is a substance presented as a medicine or an ingredient for a medicine, capable of being administered to people or animals for a medicinal purpose. The zero rate covers medicinal products purchased by a charity for the purpose of testing the efficiency of those products.

In this respect medicinal purpose means:

The relevant certificate to use from the list to claim this exemption is:

This certificate not required for purchases from other EC Member.  However a form will need to be completed and e-mailed to the finance office to avoid EC acquisition VAT being levied. This form is as follows:

Proactis code to use - ZRN

Drugs and chemicals

When the University is engaged in medical or veterinary research, it can sell and buy substances directly used for testing or for mixing with other substances in the course of that research, at the zero rate of VAT.

In this respect a substance can be natural or artificial and can be in solid or liquid form or in the form of a gas vapour. If the substance is purchased in the form of gas, the zero rating will also apply to the cylinder rental.

The relevant certificate to use from the the list to claim this exemption is:

This certificate not required for purchases from other EC Member.  However a form will need to be completed and e-mailed to the finance office to avoid EC acquisition VAT being levied. This form is as follows:

Proactis code to use - ZRN

Advertising and goods associated with donations

The University, due its charitable status, can advertise VAT-free in any medium that communicates with the public, such as a newspaper or television, providing the advert is placed on someone else’s time or space. This means that if someone charges the University for an advert, for example in their magazine or on a radio programme or for displaying a poster on their premises, they do not have to charge us VAT.

The VAT relief does not cover costs for advertising in our own media - for example in our own magazines or on our website.

Adverts qualifying for the relief can be on any subject, including staff recruitment.

Zero-rating also extends to certain goods used by charities to collect monetary donations.  The categories of goods that can qualify are certain printed stationery (appeal letters and associated printed envelopes), collection boxes, and lapel stickers and badges.

To claim the relief most suppliers will require us to complete a certificate, either in a standard format that they issue, or alternatively by us issuing a certificate. In this circumstance we have a standard form for use as follows:

Proactis code to use - ZRN

Construction of Buildings

The construction of buildings and certain works to protected buildings, intended to be used by a charity solely for non-business purposes or as a village hall or similar, can be zero-rated subject to certain criteria being met.

In this respect education is regarded for VAT purposes as a business activity and hence this potential relief is limited to buildings which are primarily to be utilised for publicly funded research.

Buildings constructed for residential purposes may also qualify for relief.

Zero-rating may also be possible for parts of buildings specifically adapted for use/access by the disabled.

This is a complex area and for further details and consideration of potential for claiming relief on a particular project please contact the University Tax Manager.

Proactis code to use - ZRN

Aids for people with disabilities etc

If the University is purchasing certain goods and services to be made available to disabled people for their personal or domestic use they may be able to be zero-rated. 

Relief may also be available for equipment purchased to assist the blind and severely visually impaired.

Please contact the University Tax Manager for further details.

Proactis code to use - ZRN

Fuel and Power

The University has certain activity that qualifies as a non-business activity (publicly funded research) and also has residential accommodation.  Supplies of fuel and power for these areas may qualify for the reduced rate of VAT, currently 5 per cent.

The installation of energy-saving materials, such as central heating and insulation in residential accommodation or in a building used solely for publicly funded research may also qualify for VAT at the reduced rate.

For further information please contact the University Tax Manager.

For Proactis code will probably need to use free post – please discuss with University Tax Manager.

Purchases from Abroad

When the University buys goods from other EU countries it does not usually get charged VAT by the supplier nor does it get charged UK VAT when goods are brought into the country.  Instead the finance office is required to log such transactions, add UK VAT where applicable, and remit this amount to HM Revenue and Customs.  Hence in effect we are in the same position for VAT liability as if the University had bought the goods in the UK.

If the normal liability of the supply is zero rated or exempt, or the finance office is notified of relief for medical/veterinary related goods, substances and products, as noted above, the VAT charge will not be levied and hence the relevant VAT relief will be applied.

Proactis code to use - OSN

Goods will not normally be subject to a VAT charge from the supplier if they are to be imported to the UK.  However, at point of entry goods will be subject to UK import VAT.  Hence in effect we are in the same position for VAT liability as if the University had bought the goods in the UK.

If the normal liability of the supply is zero rated or exempt, or an appropriate exemption certificate is submitted VAT relief will be obtained.

Proactis code to use - OSN

This is a complex area but the general rule is that foreign suppliers of services will not charge us VAT.  However, the finance office is required to log such transactions, usually add UK VAT and remit this amount to HM Revenue and Customs.  Hence in effect we are in the same position for VAT liability as if the University had bought the services in the UK.

There will be exceptions to the general rule and in limited cases relief available from the VAT charge.  For further advice please contact the University Tax Manager.

Proactis code to use - OSN

Other Supplies where direct relief anticipated

Examples of other areas where we would not be expected to be charged VAT are as follows:

Zero Rated – Proactis Code ZRN

Exempt – Proactis Code EXN